Suggested Citation:
Hargadon, Andrew (2011) The Business of Innovating: Bringing Low-Carbon Solutions to Market. Center for Climate and Energy Solutions

Climate change—and efforts to mitigate it—are creating an increasingly uncertain future for businesses. The long-term effects of a warming climate are enormously difficult to predict. In the near term, however, new policies, technologies, and market preferences are already altering the competitive landscape of entire industries. That is creating opportunities for companies that effectively produce and manage low-carbon innovations in their markets—and threatening those that, by choice or circumstance, do not.

Today’s policy environment, particularly in the United States, is creating an extraordinarily uncertain environment for business decision-making. In the face of such uncertainties, corporate executives must still make decisions that affect their company’s strategy and competitive opportunities for years. The challenge is to walk a narrow line, investing in low-carbon innovation strategies that keep them competitive without moving too far ahead of the curve. Some companies, like those in the transportation sector, have some regulatory certainty in the form of fleet fuel economy standards, which enables them to commit to low-carbon innovations. But without such industry-wide standards in many sectors, the demand for low-carbon innovations is less clear.

This report describes the particular challenges faced by companies pursuing low-carbon innovation strategies, including the different nature of innovating in mature markets versus emerging markets; the need to simultaneously achieve scale, reliability, and profitability; the risks and uncertainties from technology, market, and regulatory changes; and a bias, among some policy makers, that focuses attention and investments on radical technology breakthroughs, instead of on the innovative deployment of known solutions.